By: Jessica Zimmer, Debt.com Financial Fitness Trainer
In April 2011, Sharon Osbourne learned she and Ozzy owed $1.7 million to the Internal Revenue Service in back taxes. She quickly paid the bill. The reason was that earlier that same month, she discovered that the IRS had put a lien on one of her and Ozzy’s two Los Angeles-area residencies.
The IRS held that the Osbournes owed $718,948.25 for the 2008 tax year and $1,024,175.03 for the 2009 tax year. The IRS put a lien on one of the Osbournes’ properties to force a sale. The IRS would be entitled to its due from the proceeds.
Ozzy and Sharon Osbourne have not had a series of financial problems. Sharon Osbourne said that the lien was a surprise even to her accountants. In a statement that she released to Hollywood gossip writer Perez Hilton, Sharon said, “The lien has been paid…I hope none of this reflects negatively on mine and Ozzy’s moral character.” Sharon also said on her own Twitter account that, “Just because you’re paying someone doesn’t mean they’re doing the job correctly…You have to be on top of your own business affairs.”
The Osbournes’ situation indicates that when it comes to taxes, it is important that you check over any work your accountant has done. It is a good idea to go over government notices sent to you once you have turned in your returns. Sharon Osbourne’s statement recognizes the need for taking responsibility and being aware. The action taken against the couple clarifies that if your accountant does not do your taxes correctly, your property and moral character are on the line.
You may be able to recover monies from your accountant for malpractice, but only through a lawsuit. You will have to be organized enough to succeed in legal action while dealing with an IRS lien and perhaps an IRS audit.
Not all of us are able to come up with $1.7 million on a moment’s notice. If you find out that you owe the IRS back taxes, you can take several actions. First, contact the IRS. Determine how much you owe. Then see how the IRS can work with you to create a manageable monthly payment plan. You want to indicate that you are willing to pay off your debt in a timely manner. If you attempt to evade paying off back taxes, the amount you owe will begin to accrue interest. In addition, you may face criminal penalties.
Unlike the Osbournes, who may have written one big check to the federal government, you can choose to make automatic payments from your checking account. You can also use the federal government’s own service, the Electronic Federal Tax Payment System.
If you do not make a lot of money, consider calling a non-profit organization to assist you with audits and appeals. If you can hire a tax attorney, use their services to negotiate an optimal monthly payment plan. You may be able to file an Offer In Compromise, or OIC, to settle your debt for less than the full amount.
Finally, check to make sure that all of your back returns have been filed. The IRS wants to see that you are making every effort to get them the information they need to do their job correctly.
The lessons of the Osbournes’ debacle are many.
- Pay off the debt quickly before the penalties get worse.
- Take action to investigate the cause of the problem.
- Hire professionals who are on top of your paperwork.
- Be aware of what your accountant has done.
- Take responsibility when mistakes are made.
It is true that the everyday person cannot juggle proceeds from concerts, merchandise, music, and TV appearances to immediately pay off a tax lien. Thankfully, the IRS does not expect that of us.
C) April 17, 2011 // Copyright 4/17/2011 All material by Jessica Zimmer